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Ron Littlepage: Sorry, but $40 million won't be found under seat cushions

For anyone thinking of doing an end zone dance to celebrate the police and fire pension deal, don’t.

Even though the agreement struck between Mayor Alvin Brown and John Keane, representing the Jacksonville Police and Fire Pension Fund, is probably the best we are going to get, we have yet to cross the goal line.

Two menacing obstacles stand in the way: the source of the extra $40 million Brown pledged to put into the fund annually to pay off the $1.65 billion pension debt more quickly and a guarantee that money will be there every year until the goal of having the pensions 80 percent funded is met.

If I were on the City Council, I wouldn’t sign off on the agreement until those issues are settled.

Brown’s position is the extra $40 million annually can come from JEA.

He argues that by allowing JEA to move its employees who are now in the city’s general employee pension plan to one administered by JEA can save the utility enough money to cover the $40 million annual payment without having to raise rates.

There are problems with that.

If there are savings for JEA, the bulk of them wouldn’t come for years while JEA would have to begin making the payments on the front end.

JEA is also facing financial challenges of its own.

New environmental regulations for its coal-fired plant are projected to cost $100 million, and additional costs for other regulations could reach $1 billion.

JEA is studying Brown’s proposal but won’t have an answer until November, which is past when the council needs to act on the pension agreement.

In any case, the odds of JEA going along are slim.

The task force that studied the pension mess recommended a different way of coming up with the extra money.

It proposed a half-cent increase in the sales tax that the state allows for funding fire departments.

That would provide about $68 million a year and could replace general fund money now going to fire operations, thus freeing up that money for the extra contribution to reduce the unfunded liability.

But that’s a complex process. The state requires that the city’s ad valorem revenue be reduced by the same amount the increased sales tax brings in.

Without a property tax increase beforehand, that would be a zero sum game. And voters would have to approve the sales tax hike in a referendum.

A property tax hike to be replaced by a sales tax increase could be confusing to voters.

There’s the additional problem that the money for the fund’s debt wouldn’t be guaranteed since one council can’t bind a future council when it comes to annual appropriations of general fund money.

So here’s a perhaps lamebrained, perhaps not, idea:

The city currently has a 1 percent discretionary sales tax in place — the half-cent that replaced tolls and the half-cent for the Better Jacksonville Plan.

The state would allow that to rise to 1.5 percent, but there would be restrictions on how that money could be used.

One allowable use is to pay for local infrastructure.

If general fund money is now being used for that purpose — road and drainage work, purchasing heavy equipment for Public Works, buying fire trucks, rescue units and police vehicles, making improvements to conservation lands — the sales tax could free up that money.

And a contract could be written with JEA saying that $40 million of the annual contribution it makes to the general fund would be committed to pay off the pension debt instead.

That could be done without a rate increase as the total JEA contribution would stay the same.

Voters would have to approve the sales tax increase, but an initial increase in property taxes wouldn’t be needed.

The result would be a dedicated source of revenue and a guarantee it would be there each year.

There probably are a lot of reasons this wouldn’t work, but people smarter than me need to come up with an idea that will.